Kansas City is being wired for high speed internet, in a big way. Indeed, my neighborhood is fast approaching its installation dates.
Lots of people have been wondering if high speed internet connectivity might improve access to health care in Kansas City, particularly for seniors and the homebound. Kansas City, you see, is a city with limited public transportation and a city with considerable sprawl.
Now, low income seniors are often concentrated in older residential neighborhoods that can be quite some distance from health services that target them. In addition to beefed up senior transit, I have been wondering if health education and self-care counseling might be transformed by the arrival of the fiberhood.
In Kansas City, Kansas at KU's Alzheimer's Disease Center, a pilot project is underway to use the fast streaming characteristics of the hood to help people living with dementia and their family caregivers by offering review and consultation on real-time as well as recorded video of behavioral challenges in need of immediate discussion.
I am all for anything that helps the hidden among us who live with dementia and the, also curiously hidden, who are family caregivers for those who live with dementia. There is shame there. If I learned only one thing in my time on the State of California's Alzheimer's and Dementia State Plan Task Force Advisory Group,it is that family caregivers are deeply ashamed to admit that they may be having trouble caring for a loved one with dementia -- as if it were a failure of love or effort rather than a brain disorder. People living with dementia can be challenging as can family members. Aging into dependence on an adult child (often a senior themselves) is complicated enough a life transition without cognitive impairment added to the mix.
If we are to face the "silver tsunami" of aging Americans with equanimity, we need to be thinking hard about anything we can do to bolster family caregivers in their darkest hours.
Market bulls will be sad to see July come to an end after the performance that stocks saw during the month. Below is a look at the July performance of various asset classes using our key ETF matrix.
As shown, the S&P 500 (SPY) was up 5.17% in July, which was better than the Dow (+4.23%) yet weaker than the Nasdaq 100 (+6.31%). Smallcaps (IJR) and midcaps (IJH) both outperformed largecaps with gains of more than 6.5% during the month.
Looking at sectors, Telecom (IYZ) and Health Care (XLV) saw the biggest gains in July, while Technology (XLK), Consumer Staples (XLP) and Utilities (XLU) gained the least. For the year, Health Care (XLV), Financials (XLF) and Consumer Discretionary (XLY) are up the most at more than 25%. The Materials (XLB) sector is up the least so far in 2013 with a gain of 7.83%. It's never a bad thing when the worst performing sector for the year is up 7.83%!
Stock performance outside of the US was very mixed in July. Europe did really well, while emerging markets like India (INP) and Brazil (EWZ) posted declines. With five months remaining in 2013, there are quite a few countries that have a lot of work to do to get into the green for the year.
On the commodities front, everything but the natural gas ETF (UNG) was up in July. Oil (USO) was up the most at +9.30%, but gold (GLD) was not far behind with a gain of 7.43%. Finally, long-term Treasuries declined in July, while the aggregate bond ETF (AGG) posted a small gain of 0.08%.
All in all, July was a great month for equities. If August is half as good, investors will still be happy.
In an environment where it is often hard to remember what moved the market earlier in the day, let alone the last month, our monthly Market Headlines report serves as a useful reference tool for investors looking to refresh their minds on market-moving events of the past.
Our monthly Market Headlines report is an indispensable recap of the major events that impact the market on a daily basis. On the first page of the report, we provide an annotated intraday chart of the S&P 500 over the prior month, showing when and where major events of each day occurred. The second page of the Market Headlines report takes a longer term view, showing a daily S&P 500 chart over the last seven months, with major market events noted. In each case, the charts allow readers to see how each news event impacted the market and either continued or marked the beginning of a new trend.
The Market Headlines report is published at the start of each month, and it is available to all Bespoke Premium and Bespoke Institutional subscribers. Archives of this report are available to members as well, so you can easily look back at any period to see what the headlines were saying at that moment in time. Click on the thumbnail image below to view a sample of this report.
The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.
Earlier Freddie Mac reported that the Single-Family serious delinquency rate declined in June to 2.79% from 2.85% in May. Freddie's rate is down from 3.45% in June 2012, and is at the lowest level since May 2009. Freddie's serious delinquency rate peaked in February 2010 at 4.20%.
Note: These are mortgage loans that are "three monthly payments or more past due or in foreclosure".
Click on graph for larger image
Although this indicates progress, the "normal" serious delinquency rate is under 1%.
At the recent rate of improvement, the serious delinquency rate will not be under 1% until 2016 or so.
Although the headline reading was weaker than expected (52.3 vs. 54.0), the Chicago PMI index for July rose relative to last month's reading of 51.6. As shown in the table to right, though, just three (Backlog, Supplier Deliveries, and Prices Paid) of the indicator's seven subsectors increased this month, while Production, New Orders, Inventory, and Employment all declined. Relative to last year, the internals were even worse, as five out of seven subcomponents declined. While today's reading does not bode particularly well for tomorrow's ISM Manufacturing report, we would note that the headline reading has been increasingly volatile in the last few months and most of the other regional Fed reports that we have seen over the last two weeks showed growth and came in ahead of expectations.
Note to Self: Can Short-Run Stimulative Policy Increase the Chance of a Future Inflationary Breakout?
Paul Krugman says "no"…
Consider Japan and Abenomics. In the long-run, Paul Krugman says, the real interest rate on JGB is determined by supply-side factors: risk tolerance, time preference, and growth. None of these are affected by Abenomics. In the long run the debt-sustainability calculus is what it is, whether favorable or unfavorable.
In the short-run, Paul says, Abenomics raises expected inflation and thus reduces the short-run real interest rate on the debt--that is, after all, the point of the policy. Therefore Abenomics in the short run means that when the long-run arrives the debt-to-GDP ratio is lower, thus reducing the problem of financing the debt that we short-run policymakers hand off to our long-run successors.
Alternatively, consider that today's long real interest rates are a combination of today's short-run short-term rate and the long-run future's short-term rates. Abenomics unambiguously reduces today's short-term real rate. It leaves future supply-determined short-term rates unchanged. Thus it reduces today's long-term real interest rate. Thus it reduces the long-run cost of financing Japan's government debt. Thus it must improve rather than erode Japan's fiscal position.
I think that Paul's conclusion is ambiguously correct--as long as you buy Paul's model: has a Keynesian unemployment short-run and a classical full employment supply-side determined long-run, with today's long-term real interest rates and thus debt sustainability a fixed-weight average of the two.
How could this go wrong?
What if we were to adopt an even more Keynesian model? What if we said that there was a Keynesian short-run, a classical long-run, and a medium-run that could be either?
Could it be that amortizing JGB at its current real values is expected to be sustainable because it is thought that the debt will be paid down to some degree during a long-lasting medium-run, in which unemployment is high, short-term real rates are negative, and yet deficits are low? Could it be that Abenomics eliminates this expected substantial depressed medium-run--if it leads people to expect a rapid transition from today's depressed economy to a future full-employment long-run economy with higher real interest rates--it does not improve but rather erodes debt sustainability?
I find myself unsure…